Aviation industry rebounds in Q2 as routes open

HÀ NỘI, VIETNAM, Aug. 22 – The resumption of flights and increased passenger numbers are helping airlines and non-aeronautical businesses gradually resume their profits after the pandemic.

According to the Civil Aviation Administration of Việt Nam, in the first six months of this year, the total number of passengers in the industry reached 23.3 million, up 74.2% from the previous year. same period in 2021 and equal to 60% compared to the same period in 2019. The internal market welcomed 20.8 million passengers, an increase of 58.4% compared to the first six months of 2021 and an increase of 12 % compared to the same period in 2019.

Total cargo transported in six months was estimated at 651,000 tonnes, up 6.8% from the same period in 2021 and up 7% from the same period in 2019, of which the domestic market accounted 146,900 tons, up 3.6% compared to the first half of 2021 and down 29% compared to the same period in 2019.

According to the Civil Aviation Administration of Việt Nam, the domestic market started to recover from April, increased again in May and saw strong growth in June. In June alone, the domestic market welcomed 5 million passengers, an increase of 20.9% compared to May and an increase of 38.8% compared to June 2019 – the peak month of summer before the COVID-19 pandemic. Seat occupancy on domestic routes in June was high, ranging from 85% to 87% depending on the airline.

Lê Hồng Hà, chief executive of Vietnam Airlines, told the annual general meeting of shareholders that the Vietnamese airline market will see many positive changes as the government has reopened and resumed domestic flights and international air routes. However, the international air transport market would still face many difficulties due to the complicated course of diseases, a sharp decline in the effectiveness of vaccines and high fuel prices.

Hà said the tourists traveling were mainly Vietnamese. The number of foreign customers had not been able to recover as before the pandemic. Đặng Ngọc Hoa, chairman of Vietnam Airlines, cited forecasts that the global aviation market will recover by the end of 2024.

SSI Research also estimates that earnings growth for companies in the airline industry this year is expected to increase insignificantly as the recovery of international routes is expected to be slow, as key markets such as China, South Korea and the Japan have yet to fully reopen. Therefore, the profit of the whole industry is expected to increase more strongly from 2023.

Vietnam Airlines Corporation (ACV), the unit that directly manages 22 of Việt Nam’s 23 civil airports, had an outstanding quarter. It recorded a net revenue of 3.43 trillion VN in the second quarter, which is 2.5 times higher than the same period in 2021. During this period, revenue from aviation services reached 3, 27 trillion NV, up 123% year-on-year. Financial income reached VNĐ 1,910 billion, twice as much as in the second quarter of 2021 thanks to an increase in exchange rate differentials.

During the second quarter, this unit made a net profit of VN 1,470,000,000,000,000 thanks to the difference in exchange rates. Financial, general and administrative expenses decreased while selling expenses increased. ACV collected VN2.6 trillion in after-tax profits, 7.6 times more than the same period last year.

In the first six months, ACV’s net revenue reached VN5.56 trillion, up 61.5% from the first half of 2021.

Airlines in trouble due to rising fuel prices

As of June 30, five civil airlines in Việt Nam, including Vietnam Airlines, Vietjet Air, Bamboo Airways, Pacific Airlines and Vietravel Airlines, operate nearly 60 domestic routes connecting Hà Nội, Đà Nẵng and HCM City with 19 local airports.

Airlines encourage the operation of flight routes to tourist destinations such as Đà Nẵng, Quy Nhơn, Phú Quốc and Nha Trang. Generally, the frequency of operations to/from Phú Quốc currently reaches 100 domestic flights per day compared to 2019, when there were only 72 international and domestic flights per day.

However, the high price of oil is one of the main obstacles for Vietnamese airlines. As of June 30, Brent oil was trading around $106 a barrel, up 37.6% from the start of the year.

Vietnam Airlines (HVN) announced its second-quarter business results with revenue of VN18.3 trillion, 2.8 times higher than the same period last year. However, the cost of goods sold rose sharply to VNĐ18.7 trillion, 3.3 times higher, resulting in a gross loss of VNĐ377 billion.

Revenue from financial activities reached 149.1 billion VND, up 5.4 percent from a year ago. Selling and administrative expenses increased by 111.8% and 6%, respectively. In addition, financial expenditure was VNĐ 1.15 trillion, 2.7 times higher than the same period last year. As a result, Vietnam Airlines suffered an after-tax loss of VNĐ2.6 trillion, down from the loss of VNĐ4.53 trillion in the second quarter of 2021.

At this year’s annual general meeting of shareholders, Trần Thanh Hiền, chief accountant, explained that although this year the government has completely opened up the air routes, the price of jet fuel has increased, as have the costs of operation. VNS